The Nigerian Electricity Regulatory Commission (NERC) has disclosed that two entities with significant financial commitments in Nigeria’s power sector – the Central Bank of Nigeria (CBN) and World Bank – could invest more money to close existing metering gaps in the sector.
NERC in a document it put out inviting stakeholders’ comments on a plan to close the metering gaps of electricity distribution companies (Discos) in the sector, explained that the proposal would be built around the current Meter Asset Provider (MAP) scheme and planned National Mass Metering Programme (NMMP).
According to the commission within a three-phase schedule, the CBN could fund Discos’ deployment of five million meters while the World Bank funds the deployment of any balance in the gap.
NERC noted that metering of end-use electricity consumption in Nigeria would help the sector achieve financial stability and improve customers’ satisfaction.
It also stated that this would enhance Discos’ revenue recovery.
Besides providing a transparent and accurate measurement for energy consumed by customer, the NERC added that meters would ensure energy accounting and revenue protection for the Discos while giving customers adequate information to control and manage their energy consumption.
“The cost of providing meters to customers should ordinarily be included in end-use electricity tariffs as an investment in infrastructure and hence part of the rate base for computation of revenue requirement.
“However, the prevailing absence of cost-reflective tariffs, a contributory factor to the impairment of Discos’ balance sheets, adversely impacts on the capacity of Discos to raise the necessary financing to support critical investments including but not limited to the metering of customers,” said the NERC which noted its various regulatory interventions on metering.
It stated that the MAP regulation which was announced in March 2018 to eliminate estimated billing practices, attract private investment in the provision of metering services and enhance revenue assurance in sector while promoting local meter manufacturing in Nigeria could not start off 2019.
According to NERC: “A total of 611,231 meters have been deployed as at 31st January, 2021 under the MAP initiative since its full operation despite the COVID-19 pandemic and other extraneous factors.
“The challenge of closing the metering gap in NESI still persists as more than half of the registered electricity customers remain unmetered.”
It further explained that the existence of a huge metering gap and the need to ensure successful implementation of the new service-based electricity tariff it granted the Discos resulted in the federal government approving NMMP.
Through the NMMP, it explained the government would provide long-term low interest financing to the Discos to increase their meter deployment rate, promote local meter manufacturing, create jobs in the local meter value chain, reduce collection losses and enhance the sector’s finance.
It said the phases of the NMMP would first see the CBN provide funding to the Discos to procure one million meters from the existing stock available from MAPs within three and six months.
Subsequently, NERC noted that within the next phase, the CBN shall provide financing to the Discos to procure up to four million meters through a competitive procurement process among local meter manufacturers and assemblers, while the last phase will see the World Bank finance the Discos procurement of meters to close any outstanding gaps.
Hence, it asked stakeholders to review the various options to fast track the closure of the metering gap within the MAP and NMMP framework, with the intention to consider either to allow the NMMP and MAP to run concurrently, transfer NMMP to the MAP framework or wind down the MAP framework and allow the Discos to procure meters directly from local manufacturers.
